Middle East Tensions and High Crude Oil Prices Push Rupee Past 84-Mark Against US Dollar

New Delhi: Amid escalating geopolitical tensions in the Middle East and surging crude oil prices, the Indian rupee on Friday breached the 84-mark against the US dollar for the first time. The rupee weakened by 0.12 to 84.09, driven by the recent rise in the US dollar index, which climbed from $100.50 to $102.40.

Market analysts highlight that the continued volatility in the Middle East is expected to keep oil prices elevated, further weakening the rupee. Brent crude oil prices surged to $78.92 per barrel, up from $69 at the end of September.

In addition, foreign portfolio investors (FPIs) have withdrawn approximately Rs 55,000 crore from Indian equities in the last nine days, adding pressure on the currency.

On Friday, the rupee reached an intraday high of 83.96 before closing at a record low of 84.09. Analysts predict the rupee could decline further, with potential support in the 84.20-84.35 range, while resistance may occur between 83.70-83.80.

Jateen Trivedi of LKP Securities stated, “The continued outflow of foreign funds from Indian markets has added to the rupee’s weakness, which may continue to slide if the 84.00 level doesn’t hold.”

Despite this, the Reserve Bank of India (RBI) remains confident in the rupee’s stability. RBI Governor Shaktikanta Das emphasized that the rupee is still one of the least volatile currencies globally.

India’s heavy reliance on imported crude oil remains a key factor in its currency valuation. Rising crude oil prices, spurred by fears of potential supply disruptions due to the Middle East conflict, have further strained the rupee.

Meanwhile, gold prices continue to soar, with Comex trading above $2,635 and domestic markets seeing a rise to Rs 75,750. Analysts attribute this trend to ongoing inflation concerns, supported by elevated crude oil prices and US data indicating potential interest rate cuts due to high unemployment claims.